If Apple buys Disney: analysts said the mega-deal could change the world

Apple about to buy Disney? Analysts are guessing will happen — given that this would be a really huge deal, hundreds of billions of dollars. Researchers at RBC Capital Markets believe that the Union is the most expensive tech company in the world and almost a century of media giant would have caused a storm in the technology sector and the entertainment industry.

“The company is huge, and its financial capacity will allow us to revolutionize the services, and the manufacture of devices and content. If something is able to scare and Silicon valley, and Hollywood, it is such a Union,” they say in a note to investors. But where did these rumors and how likely such a deal?

In theory, Apple has the money needed to purchase Disney. In foreign accounts, the company holds about 230 billion dollars. They are waiting for the return to the country, but this operation is fraught with enormous losses for tax purposes, therefore, the Corporation is waiting.

CEO Tim cook said that “optimism” looks at the prospects for tax reform, which will allow you to avoid huge losses in case of repatriation of capital in the United States.

Disney will be costly

Apple a lot of money, but Disney is a very expensive company with a market capitalization of 237 billion dollars. In addition, RBC analysts believe that in the case of a transaction Apple will have to pay 40% more than the current value of the stock. If the company will be able to repatriate after-tax $ 200 billion, this amount is still not enough and have to borrow.

So far the most expensive acquisition Apple has cost her two orders of magnitude cheaper — the company has bought music company Beats for $ 2.2 billion.

In General, it will not be easy, but many are still wondering about this possibility. According to analysts, investors “frequently asked” whether Apple to buy Disney.

But why would Apple try to buy Disney? There are several possible reasons:

  • To reduce the dependence of its business on sales of the iPhone. Now they account for more than 60% of all revenues. This phenomenally successful product, but in the end, Apple is very dependent on the market situation.
  • To encourage the development of services. In the face of slowing growth of the smartphone market Apple is trying to develop other areas, and a variety of services (including Apple Music) is very important for the company. Disney, with its vast library of content and media channels, the subscription would come in very handy.
  • To compete with Netflix and Amazon at their own game. By combining technological expertise with content library and experience in its production, the company could become a significant player on the market streaming.

RBC writes: “none of the players individually did not enter this market, perhaps due to high competition. At the same time, the combined company would be the ready tool of distribution of the video (using devices sold by Apple, and the iTunes store), as well as a huge library of ready-made content and capacity for the production of films and television shows”.

To bring Apple shareholders a direct financial benefit. RBC analysts estimate that in case of purchasing Disney earnings per share will grow by 18%.

Finally, the two companies have something in common. Steve jobs, the late Apple chief Executive, was also the largest shareholder of the animation Studio Pixar, which now is a part of Disney.

So, can we expect Union? Apparently, the RBC study was provoked by the rumors and questions from investors, not insider information or evidence going on between the companies negotiations. Analysts acknowledge that “the chances are small, but they are above zero.”

Talk about a possible deal sound for many years.

In 2016 John Malone, who for many years was on American cable television, said that if ESPN sports channels separated from Disney, then the rest could be of interest to Apple. In addition, Disney CEO Bob iger serves on the Board of Directors of high-tech companies.

“If the deal ever happens, it will be a huge event, and the resulting organization will become a player of unprecedented scale in production and distribution of content with a huge potential to create a competitive streaming video service. The company will have a huge technical and financial capabilities, which can be used for the acquisition and protection of the rights to the content. Also expect the integration of Apple technologies in theme parks and consumer products of Disney” – write to RBC.

In addition, experts note that in case of Association of the company will receive a number of unique capabilities and will be able to tackle even those tasks that were previously daunting.
And finally, the main argument of analysts of RBC in favor of the deal: “it is Important that Apple and Disney — not just leaders in their industries. Each of the companies is a business conglomerate of global scale with their own unique products and services, who are familiar with almost the entire population of the planet. The companies almost never compete. So if you wonder what they can do together, given the scale of the financial and technical capability, the answer will be anything.”